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On April 30, local time, Changpeng Zhao ushered in the final trial in the United States. After paying a sky-high fine of $7.216 billion, he was sentenced to four months in prison.
Changpeng Zhao, the richest man in China, the founder and CEO of Binance, the world's largest cryptocurrency exchange, has to add a "former" to these halos as the judge decides on it.
His latest status is: the richest prisoner.
How was Changpeng Zhao's business empire built? Why was he arrested in the United States? A trial brought him into the field of vision of more people.
In 1977, Changpeng Zhao was born in Lianyungang, Jiangsu Province, to a family of scholars. The family was sent to a remote village, where living conditions were difficult and educational resources were scarce. Changpeng Zhao spent the first few years of his life in a barren environment.
Soon after, the family came to Hefei. Changpeng Zhao's father, Zhao Shengkai, worked at the University of Science and Technology of China, and Changpeng Zhao had the opportunity to meet senior students, often listening to their debates about academics and society.
"Those people taught me how to play chess and how to think," he recalls. Spending time with people who are seven to ten years older than me makes me think differently than my peers. ”
In 1987, Zhao Shengkai received an offer from a doctoral program in geophysics in Canada and immigrated to Vancouver, Canada with his family. Changpeng Zhao was only 10 years old that year.
When he was studying in Vancouver, Changpeng Zhao's classmates came from different cultural backgrounds, with most of the Chinese students coming from Hong Kong and Taiwan. He observed that students from Hong Kong, China, pursued brands and fashion, while students from Taiwan, China, were more humble despite their equally wealthy families.
In his spare time, Changpeng Zhao works part-time at gas stations and McDonald's. When he grows up, he will also post photos of his part-time job at McDonald's to social platforms.
This time has cultivated his values of humility and hard work, and different cultures have enriched his soul and allowed him to see the world more openly.
Changpeng Zhao loves volleyball, trained hard to become the captain of the volleyball team, and also participated in the Canadian National Mathematics Competition. He demonstrated his professional skills and leadership at school, earning him the nickname "Guan" (because the Chinese pinyin changpeng and the English champion pronunciation are similar).
At the age of 13, his father bought a state-of-the-art 286 computer, which cost 7,000 Canadian dollars, which was his salary for several months. The purpose is to allow Changpeng Zhao to use this computer to learn programming and master computer technology.
"In retrospect, it really helped me get on the right path. I am eternally grateful. ”
Changpeng Zhao took a group photo with the computer
Zhao Shengkai has spent his life immersed in the world of laboratories and computers. The original code he wrote allowed the company GEO Tech to create a three-level inversion of geophysical data using software; Write user manuals that allow companies to use for many years.
But it is precisely because of the focus on his career that Changpeng Zhao has little family communication with his father.
When his father died of leukemia in 2021, Changpeng Zhao reminisced: "I was the captain of the volleyball team, and I had two games a week, but my parents never watched one. ”
In 1995, at the age of 17, Changpeng Zhao left Vancouver and went to Montreal, nearly 5,000 kilometers away, to study computer science at McGill University.
In the field of computing, Changpeng Zhao showed an amazing talent, and during his undergraduate years, he collaborated with Professor Jeremy Cooperstock to publish an academic paper on artificial intelligence. Today, the discussion of artificial intelligence is hot, but 30 years ago, it was a cutting-edge topic that few people paid attention to.
In the professor's team workshop, Changpeng Zhao was the only undergraduate.
Along the lines of academic research, he may become a university professor or even a frontier scientist, but a book he reads by chance changes his plans for the future.
The world-selling wealth book "Rich Dad Poor Dad" tells the story of two fathers who obtained wealth through different paths. After reading it, Changpeng Zhao was deeply touched.
His father, Zhao Shengkai, was a rigorous scholar who worked decently, always staying in the laboratory, conscientiously recording experimental data. Changpeng Zhao believes that his father, who should have enjoyed higher achievements and fame, was trapped in his immigration status and could only do some marginal research in the end.
In the past, after playing volleyball, Changpeng Zhao was always carried home by his friend's father in a BMW, but his father drove a dilapidated car.
His father once instructed him: "Get a decent job and work hard." Now, he began to think, is decency really important? What exactly do you want?
He decided to jump out and take the opposite path.
While in college, Changpeng Zhao interned at the Tokyo Stock Exchange, developing a system for matching trading orders.
Later, he developed futures trading software on the Bloomberg trading platform in New York. At the age of 27, less than two years after his career, he was promoted three times and managed teams in Tokyo, London and New Jersey.
Changpeng Zhao is not satisfied with this, he wants to start his own business empire rather than work for others.
At that time, China's development was booming, and many miracles were born, such as Ma Huateng and Ma Yun. After many years, Changpeng Zhao once again set foot on the land of China and chose to develop in Shanghai, the economic locomotive, and he also wanted to become one of the miracles.
"A few people said, 'Let's go to Shanghai to start a business,' so I went."
In 2005, Changpeng Zhao founded Fusion Information Technology to develop trading systems for brokers.
If, up to this point, Changpeng Zhao's resume is beautiful, but he is only the one that is not special among successful entrepreneurs. At that time, he would not have imagined that a card game 8 years later would completely change his life.
In 2013, there was a dark current in the seemingly ordinary game, and a big man sat in his seat, and everyone was playing cards while trying to learn about new business trends. This boss is Li Qiyuan, the founder of China's first bitcoin exchange "Bitcoin China".
Li Qiyuan
Li Qiyuan told Changpeng Zhao: "Put 10% of your net worth into it." If it goes to zero, you'll lose no more than 10% of your net worth, but it's more likely to double. ”
At that time, Changpeng Zhao knew little about Bitcoin, but he was deeply attracted by the Bitcoin world depicted by Li Qiyuan.
In 2009, Japanese-American Satoshi Nakamoto created Bitcoin, which combines virtual and encrypted characteristics, without the help of any intermediaries of countries and institutions, without worrying about exchange rates and inflation, and is completely in the hands of users.
Li Qiyuan's words completely planted the seed of Bitcoin in Changpeng Zhao's heart: "Bitcoin is the future." ”
When it comes to Changpeng Zhao's entry into Bitcoin, I have to mention his other guide, He Yi. He Yi is Changpeng Zhao's current partner and has given birth to three children for him.
After leaving Fusion Information Technology, which he founded, Changpeng Zhao first served as a technical lead for Blockchain, a website whose business focused on tracking Bitcoin transactions. A year later, He Yi invited Changpeng Zhao to join OKCoin, which Xu Xingxing founded.
He Yi's story is also legendary. Born in 1986 in a remote rural area of Sichuan Province, she was smart and diligent, always ranked first in exams, and was only admitted to a junior college due to her backward education level.
Before the age of 20, He Yi worked as a beverage promoter with a salary of less than 1,000 yuan a month, and later changed jobs to become the manager of a bedding store.
She thinks she's capable of much more than that, and she doesn't want to spend her life in a mess. In 2006, she went to Beijing to study as a graduate student majoring in psychological counseling, and after graduation, she worked as a class teacher at her friend's university.
In 2012, under the recommendation of another friend who is a choreographer, He Yi stood out among the professional hosts, models, and actors, and became the location host of the programs "Beautiful Destination" and "How Far to Go". And a year later, with his hard work, he became the host of "Beijing New Discovery".
He Yi is presiding
For work, He Yi needs to be in contact with celebrities from all walks of life. In 2014, when cryptocurrencies were in full swing in China, OKCoin had just started a business, and investor Mai Gang wanted He Yi to help promote Bitcoin in the circle of friends.
He Yi planned OKCoin's appearance in Times Square in New York, making it one of the first-tier exchanges. Her outstanding professional ability has made her known as "the first sister in the currency circle".
At a Bitcoin conference, He Yi was impressed by Changpeng Zhao's speech and invited him to join OKCoin. Since then, the "Bitcoin Heavenly Group" has gathered, namely He Yi, Changpeng Zhao, and Xu Xingxing, who are known as OKCoin's troika.
From left to right: Xu Xingxing, He Yi, Zhao Changpeng
In 2014, Changpeng Zhao did a crazy thing and sold his property in Shanghai for Bitcoin. At that time, no one dared to put his entire net worth on cryptocurrencies like Changpeng Zhao, even if he was optimistic about the prospects of Bitcoin.
Fate played a joke on Changpeng Zhao. In less than a year, the price of real estate in Shanghai has more than doubled, and the value of Bitcoin has almost halved. This did not dampen Changpeng Zhao's confidence in Bitcoin, but because Bitcoin played itself around, he believed it was profitable even more.
Just as Changpeng Zhao's belief in Bitcoin gradually deepened, the conflict between him and Xu Xingxing intensified. Perhaps due to their different cultural and academic backgrounds, they have a lot of differences in the company's development path. In 2015, Changpeng Zhao left the company in anger.
Xu Xingxing
After the two parted ways, there was no consensus that "a breakup should be decent", and Changpeng Zhao wrote 1,600 words on social platforms, angrily accusing Xu Xingxing of arranging the company to use robots to falsify trading volume and reserve certificates, and the financial situation was not transparent. Xu Xingxing also accused Changpeng Zhao of falsifying his academic qualifications.
The unhappy parting of the two also affected the middleman He Yi. Eventually, she made the choice to leave OKCoin and join Changpeng Zhao's company.
After leaving OKCoin, Changpeng Zhao founded a software services company that powers exchanges, laying the foundation for his later cryptocurrency company.
In 2017, cryptocurrencies skyrocketed 20-fold, reaching $20,000 per unit. Changpeng Zhao took advantage of the opportunity to create the company Binance, holding 200 million tokens BNB, 100 million for ICO (public offering), 80 million for the team, and the remaining 20 million for angel investors.
It looks lofty, but it's actually very simple. Users can trade cryptocurrencies on Binance, and finally withdraw them into US dollars or other currencies, and Changpeng Zhao earns a fee for each transaction.
Changpeng Zhao chose a very bold slogan for Binance: Exchange World.
Two months after Changpeng Zhao founded Binance, China issued an announcement defining virtual currency issuance and financing activities as "illegal financial activities", severely banning token issuance and closing cryptocurrency trading venues.
Because of the ban, the token BNB fell severely, and Binance needs to compensate users with a total of $6 million. "At that time, Binance was not profitable and kept burning money, and the cost of recruiting and developing was very high." Changpeng Zhao decided not to evade responsibility and resolutely paid compensation.
The 6 million earned Binance a good name, and a large number of users poured into Binance. Changpeng Zhao also drew lessons from this: "Take care of the user, and the user will take care of the company." ”
Binance achieved a profit of $7.5 million in 3 months, and in less than half a year after its establishment, it attracted 6 million users, covered more than 180 countries, and reached a staggering profit of $200 million with a capacity of 1.4 million transactions per second, making it the world's largest cryptocurrency exchange.
In China, cryptocurrency exchanges have lost the soil for development and have been shut down, and even Li Qiyuan has switched to blockchain. Changpeng Zhao migrated data from more than 200 Alibaba servers to other web servers such as Amazon and relocated the company to Tokyo.
Binance was founded not long ago, and it was destined to be displaced.
After 3 months in Tokyo, Binance was "expelled" by Japanese regulators. The decentralization of cryptocurrencies, i.e. not regulated by any institution, completely secure and private, is extremely tempting for users, but for any country, the loss of regulation of wealth puts financial security in a state of uncertainty.
In the cryptocurrency world, there are gray or black transactions that are not easy to detect and track.
Changpeng Zhao traveled to England. Because Binance does not have a headquarters, the UK has refused to provide Binance with a legal license on the grounds that it cannot be regulated. The United States, Taiwan, Singapore, the European Union and other regions also rejected Changpeng Zhao one by one.
While Binance is used globally for cryptocurrency transactions, there is no place in the world that accepts Binance to provide legitimacy support.
In the end, Changpeng Zhao found a very cyberpunk way of working: more than 3,000 people scattered around the company, no fixed office space, and he himself remained secretive, and almost no one knew about his itinerary.
"Where I am, Binance's office is there."
When China banned domestic cryptocurrency trading, Binance quickly found its own operational strategy, responding to the policy restricting domestic trading while seeking other solutions.
Binance is willing to spend money on marketing, and has given away luxury cars such as Porsche, Mercedes-Benz, and Lamborghini at different events. The situation of "displacement" did not affect Binance's success, which at its peak exceeded two-thirds of the total market share, and still accounts for more than half.
In the first quarter of 2024, the total spot trading volume of Binance's trading services was $4.95 trillion, and the total market value of its own token BNB was around $90 billion.
As of April this year, Changpeng Zhao's net worth on the Bloomberg Billionaires Index was about $42.6 billion, ranking 29th in the world. The vast majority of the wealth comes from the 30% of Binance shares in hand.
At the end of 2021, Changpeng Zhao's net worth of $94.1 billion made him the richest Chinese and one of the top ten richest people in the world.
James Radecki, head of global business at Cumberland, presented a sweatshirt to Binance CEO Changpeng Zhao on the stage of Binance Blockchain Week
The U.S. side believes that Binance's success is inseparable from the U.S. side. From its inception to 2022, Binance has more than one million U.S. users, who have made more than 20 million deposits and withdrawals totaling $65 billion, and more than 900 million cryptocurrency spot transactions totaling $550 billion.
Binance has always wanted to tap into the huge U.S. market as safely as possible.
In 2019, Binance launched Binance US, an independent platform, for US customers. In 2021, Brian Brooks, the former acting administrator of the Office of the Comptroller of the U.S. Comptroller of the Currency, was invited to become the CEO of Binance in the United States, but Brian resigned three months later due to disagreements.
In March 2023, the United States charged Binance and Changpeng Zhao with illegal trading; In June of the same year, the U.S. Securities and Exchange Commission announced that it had brought 13 charges against Binance and Changpeng Zhao.
As a money services institution operating in the United States, Binance does not have a legal license from the U.S. Department of the Treasury. Binance US has legitimacy, but Binance is outside the regulatory system.
The most important reason why the US is cracking down on Binance is that cryptocurrencies are hitting the center of the US dollar.
Changpeng Zhao is more than "4", and in the cryptocurrency space, "4" stands for "rejection of FUDs, fake news, and attacks", and FUD is an abbreviation for fear, uncertainty, and doubt
The accusations against Changpeng Zhao emphasize that he "threatens the national security of the United States" and argues that Changpeng-led Binance failed to implement effective anti-money laundering measures and violated the Bank Secrecy Act and economic sanctions in the United States.
In the US accusations, Changpeng Zhao is a "terrorist", and Binance has become a hotbed of child sexual abuse, drugs, and terrorist financing. Binance has allowed more than 100,000 transactions in support of activities such as terrorism and illegal drugs. When VIP users are investigated by law enforcement, Binance calls them in advance to "encourage them to provide information that they are not in the United States." ”
In November 2023, the elusive Changpeng Zhao finally appeared and went to the federal court in Seattle to sign the plea agreement.
Under pressure from the U.S. Department of Justice, the U.S. Federal Court in Seattle, the U.S. Securities and Exchange Commission, and other parties, Changpeng Zhao signed a plea agreement and paid a fine of $50 million, while paying a fine of $4.3 billion for suspected money laundering and other crimes.
At the same time, Changpeng Zhao also promised to resign as CEO of Binance and not participate in any activities of Binance for three years.
Open AI CEO Sam Altman tweeted after being ousted by the company's board of directors: "It feels like reading your own eulogy while you were alive." Before Zhao Wenpeng "officially announced" his resignation as CEO of Binance, he reposted a comment: "When to let go of the company you founded is one of the hardest decisions. ”
When announcing Binance's new CEO, Changpeng Zhao was more rational: "Today, I resigned as Binance's CEO. Admittedly, emotionally speaking, letting go is not easy. But I know it's the right thing to do. I made a mistake and I have to take responsibility. It's best for our community, for Binance, and for myself. ”
Changpeng Zhao walked to the court
Changpeng Zhao had planned to return home to the UAE after signing a plea agreement in the United States. A few months ago, He Yi gave birth to their third child for Changpeng Zhao. But this request was denied.
The federal court in Seattle fined Changpeng Zhao another $50 million and ordered him to pay $175 million in bail. Finally, Changpeng Zhao can return to the UAE on bail. (But in April 2024, Changpeng Zhao's personal freedom was restricted again: he was required to surrender his Canadian passport, he could not change his residence in the United States without permission, and he needed to report three days in advance when traveling in the United States.) ）
A month after the guilty plea, the U.S. Commodity Futures Trading Commission announced a $2.85 billion penalty for Binance and founder Changpeng Zhao.
Several penalties add up, and Changpeng Zhao has paid a huge fine of $7.216 billion.
At the end of April 2024, Changpeng Zhao ushered in the final trial, and it was reported that he will be sentenced to 36 months in prison. Before the trial, Changpeng Zhao submitted a letter of his own to the judge, along with 161 letters of solidarity from family, friends, dignitaries, employees, and other important people.
Former U.S. Ambassador to China Max S. Baucus, McGill University Professor, Associate Professor Gu Ronghui, Columbia University Professor, United Arab Emirates Nation Ethnic Member, and more.
Changpeng Zhao and He Yi
In the first paragraph of the letter of support, He Yi wrote: "I hope this letter can help Mr. Judge understand a more authentic Changpeng Zhao." ”
The letter mentions:
"Under CZ's guidance, Binance has helped more than 180,000 users recover more than $441 million in assets."
"In this emerging Wild West, there are countless practitioners who are playing more of a predator role, and CZ has always insisted that we should do the right thing: protect users."
"If you compare the crypto industry to the Wild West, CZ is the guardian of this wasteland."
"I'm not saying here that CZ didn't make mistakes, but his biggest mistake was ignorance."
At the final trial on April 30, local time, the judge said that he had personally read 161 letters of solidarity and believed that Changpeng Zhao had the ability and willingness to reform his ways. In the end, Changpeng Zhao was sentenced to 4 months in prison.
Changpeng Zhao's New Year's resolutions in 2023 are education and compliance.
"After spending this time on my own, I will focus on the next chapter of my life. I will remain a passive investor (and holder) of cryptocurrency. Our industry has entered a new phase. Compliance is very important. ”
Changpeng Zhao said at the trial that he wanted to build an online education platform for poor children.
The sky-high fine he paid temporarily pulled Binance off the ground, and while accepting it, it also showed that the United States had finally given it legitimacy. This is a wish of Changpeng Zhao.
(Excerpted from the WeChat public account)